Ten years later: How the iPod ate the music industry's lunch

The first iPod was revealed quietly at a presentation by Steve Jobs on 23 October 2001 and was in stores a month later. Designed with Jonathan Ive’s trademark flare for simplicity and ease of use, it could store 1,000 songs, had a battery that lasted ten hours, and could easily fit in your pocket.

The iPod wasn’t the first, or the biggest, or the cheapest digital music player, but it hooked up to Apple’s iTunes music software, itself only launched in January 2001. iTunes meant that it was relatively easy to get music on and off your iPod, creating a seamless experience that other digital music players around at the time struggled to match.

It wasn’t long before the iPod’s hallmark white earbuds became a status symbol. It was a desirable item and one that would change the music landscape forever. But if anyone in the music industry did spot the potential of the iPod, it was with a muttering under the breath and the question, How can we stop it?

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For stopping portable digital music was already high on the industry’s agenda. The Rio Diamond, one of the earliest MP3 players, was the subject of a lawsuit by the Recording Industry Association of America (RIAA). In October 1998, the RIAA claimed that the Rio was a ‘ music-piracy device’ and asked the courts to prevent its release. They failed, but the suit was a clear indication of the approach the industry would take over the next decade; one that they still haven’t entirely grown out of.

There were really only two ways to get digital music back then: P2P file sharing sites like Napster or ripping your own CDs. Napster launched in 1999 and was famously sued into oblivion, shuttering in July 2001, just a few months before the iPod came out. And ripping CDs could be a slow and tedious process. I certainly remember rips that went wrong, resulting in one single audio file that I had to cut up by hand.

iTunes made it easier to digitise your CD collection, but for the law-abiding music fan, and the industry, it would be another two years before buying digital music became easy. That moment was the launch on 28 April 2003 of the iTunes Music Store. It launched with only 200,000 items from what were then the Big Five record labels: EMI, Universal, Warner, Sony Music Entertainment, and BMG. But even if it didn’t always sell the songs you wanted, it was a huge success.

The music industry reacted not by examining the successes of P2P and iTunes and working on their own digital music platform, but with DRM (digital rights management), restrictions that attempted to prevent the buyer from copying music. Initially, music bought from iTunes suffered from DRM, but buyers could easily burn the music to CD and then re-rip it in the DRM-free MP3 format: The ‘analogue hole’ that was impossible to plug.

Apple was eventually able to drop DRM from the vast majority of their music, not least because of competition from the likes of Amazon who started selling unencumbered MP3s in 2008. They now have a selection of over 18 mn songs and have, to date, sold 16 bn tracks. It is the biggest digital music vendor, claiming 70 percent of the market, with AmazonMP3 a sad second with 12 percent. And Apple take a 30 percent cut of everything they sell, with the remaining 70 percent paid in royalties to the record companies, producers and, eventually, artists.

This left the music industry and particularly musicians, in the dust. Music had once been scarce, now it was everywhere, quite literally. But the RIAA, along with international counterparts such the UK’s BPI, did nothing except sue. They failed to fully capitalise on the burgeoning MP3 market, leaving it to a tech giant and an online bookseller to become the key distributors of digital music.

The landscape continues to shift, of course, with the music streaming from Spotify, Rhapsody and now even Facebook changing the way, and what music lovers listen to. The iPod itself has had to be reinvented, with apps, to compete with the vast number of phones that can store huge amounts of music.

But whilst that iconic white music player may fade into the past, the changes it has wrought are permanent. Its legacy is more music, more widely available, and more easily downloaded at a cheaper price then ever before. Not bad for a little device whose prototype Steve Jobs dropped into a fish tank to see how much air bubbled out.